Why Decentralization Matters?

On the surface, many of the design goals of a decentralized blockchain-based platform can be accomplished both faster and cheaper by using existing platforms.

For example, the cost to store data or perform computation on the Ethereum blockchain are between thousands and millions of times higher than the cost of performing the same functions on Amazon’s Web Services. A developer can always build a “centralized” application or even a centralized currency at a fraction of the cost of doing the same on a decentralized platform because the decentralized platform will, by definition, have many redundancies in its processes and storage.

Why is it important to pay the added cost to support decentralization?

Because not all data is created equal.

Certain elements of value, for example the bits representing ownership of digital currency, personal identity or titles to assets, are highly sensitive. In a centralized system, the following players can all directly change the value of any balances they come into contact with:

1. The developer who controls the release or update of the application’s code

2. The platform where the data is stored

3. The servers which run the application’s code

Even if none of these players intend to operate with bad faith, the actions of governments, police forces and hackers can easily turn their hands against their users and censor, modify or steal the balances they are supposed to protect.

A typical user will trust a typical centralized application, despite its potential vulnerabilities, with everyday data and computation. Typically, only banks and governments are trusted sufficiently to maintain custody of the most sensitive information — balances of wealth and identity. But these entities are also subject to the very human forces of hubris, corruption and theft.

For example, the Global Financial Crisis in 2008 showed the fundamental problems of trusting an over-leveraged banking system. It also provided a timely example of how governments around the world implement substantial capital controls on citizens during times of crisis. Beyond this example, it has become a truism that hackers now likely own most or all of your sensitive data.

By contrast, a fully decentralized system doesn’t have an “off” switch and it doesn’t have a way for nefarious forces to impose their will on the applications built on top of it. To accomplish this, the system requires substantial redundancy in both computation and storage of data because any points of failure in these areas can be exploited. The more sensitive the information being stored, the more redundancy and security is required… and the more decentralization matters.

Blockchain-based systems are the substrate for this decentralization because their immutability provides the primitives — tokens, for example — necessary to incentivize cooperation and coordination among the numerous actors who make up these systems and power their redundancy. Once these systems are launched, they become essentially “unkillable”.

The benefits of building applications on top of such a system are substantial. Not only is highly sensitive information secured and available globally, but currency is now a native primitive of the medium. These decentralized applications operate on a more complex infrastructure than today’s web but they have access to an instantaneous and global pool of currency, value and information that today’s web, where data is stored in the silos of individual corporations, cannot provide. As importantly, the data these apps secure is fully owned and controlled by their end users rather than the apps themselves. This opens up a wealth of new use cases which could not exist without a decentralized infrastructure.

While decentralization is crucially important, not all blockchain-based systems are decentralized. Decentralization is a scale which can be measured along a number of dimensions but, fundamentally, it comes down to how many players in the system must be corrupted in order to break the system itself and how likely that is to occur. The more important the assets the system must protect, the more important it is that true decentralization is achieved rather than a system which merely pays lip service. Later sections will describe the technical architecture which achieves decentralization for GIL.